usually, the lender pays out the loan in installments, as work is completed. You really ought to ask your lender for all of this information, so that you understand every aspect of it. Also, you may have to purchase additional insurance ( if you own the lumber, and it is stored on the property, for instance) and may want to look into having the contractor furnish a performance bond. Talk to your lender, and, if the renovations are expensive and will take some months to complete, see a real estate lawyer to review the loan documents and renovation agreement with the contractor, as well as advise you about what insurance coverage you should obtain and what insurance coverage the builder should obtain, before you sign anything. You need to understand your obligations, and those of the lender and contractor, completely. Best of luck to you. No one can really answer your question intelligently on this forum--it is actually a complex issue.